After federal investigators were unable to prove these initial accusations, the government conducted a separate investigation and was ultimately only able to charge Lee with improper handling of restricted data, one of the original 59 indictment counts, to which he pleaded guilty as part of a plea settlement. In June 2006, Lee received $1.6 million from the federal government and five media organizations as part of a settlement of a civil suit he had filed against them for leaking his name to the press before any formal charges had been filed against him.[2] Federal judge James A. Parker eventually apologized to Lee for denying him bail and putting him in solitary confinement, and excoriated the government for misconduct and misrepresentations to the court.[3]

In My Country Versus Me, Lee describes life as being harsh. His father died when Lee was very young. His mother suffered from asthma and eventually committed suicide so that she would not 'burden' the family. He was a young boy in Taiwan when Republic of China (ROC) forces violently suppressed the February 28 Incident of 1947. Taiwan was placed under martial law; his brother died when he was a conscript and his commanding officers allegedly wouldn't allow him to take medicine. Lee, however, overcame these odds. He had what he describes as a wonderful teacher in the 6th grade who encouraged his intellectual abilities. Eventually he made his way to university, where he became interested in fluid dynamics and studied mechanical engineering at the university.[3]

Lee was publicly named by United States Department of Energy officials, including Secretary of EnergyBill Richardson, as a suspect in the theft of classified nuclear-related documents from Los Alamos.[5] Richardson was criticized by the Senate for his handling of the espionage inquiry by not testifying in front of Congress sooner. Richardson was less than truthful in his response by saying that he was waiting to uncover more information before speaking to Congress.[6]

On December 10, 1999, Lee was arrested, indicted on 59 counts, and jailed in solitary confinement without bail for 278 days until September 13, 2000, when he accepted a plea bargain from the federal government. Lee was released on time served after the government's case against him could not be proven.[5] He was ultimately charged with only one count of mishandling sensitive documents that did not require pre-trial solitary confinement, while the other 58 counts were dropped.

President Bill Clinton issued a public apology to Lee over his treatment by the federal government during the investigation.[5] Lee filed a lawsuit to gain the names of public officials who had leaked his name to journalists before charges had been filed against him.[5] It raised issues similar to those in the Valerie Plame affair, of whether journalists should have to reveal their anonymous sources in a court of law.[5] Lee's lawsuit was settled by the federal government in 2006 just before the Supreme Court was set to decide whether to hear the case.[5] The federal judge who heard the case during an earlier appeal said that "top decision makers in the executive branch" "have embarrassed our entire nation and each of us who is a citizen."[5]

In 1982, Lee was recorded on a wiretap speaking with another Taiwanese-American scientist who had been accused of espionage. Lee offered to the scientist to find out who had turned him in. When confronted by the FBI about this incident, Lee said he did not know the scientist, until the FBI demonstrated proof of the conversation. Despite some evidence that could have kept the case open, the FBI closed this file on Lee in 1984.[7]

Lee did not get the attention of the FBI again for 12 years until 1998. The FBI had lost the file on Lee from the 1983 and 1984 meetings with him, and had to reconstruct the information. In 1994, a delegation of Chinese scientists visited Los Alamos National Laboratory in an unannounced capacity for a meeting. One of the scientists visiting was Dr. Hu Side, the head of the Chinese Academy of Engineering Physics, essentially the head of the Chinese nuclear program.[neutrality is disputed] He also was credited with the design of the small, W88-like weapon. However, despite the visit being unannounced, Lee showed up to the meeting uninvited. Side and Lee clearly knew each other and were friendly.

This alarmed LANL officials who contacted the FBI, which opened up another investigation of Lee. On December 23, 1998 Lee was given a polygraph test by Wackenhut, a DOE contractor. He was not told of the reason why, other than that it involved his latest trip to China to escort his nephew. During the questioning, he admitted that he had, in fact, met with Dr. Hu Side in a hotel room in 1988 and that Side had asked him for classified information, which he refused to discuss.

Lee admitted that he failed to report this contact and approach by individuals requesting classified information as required by security regulations. He was told that he passed the test, but was stripped of his Q (classified) clearance to the LANL's classified X Division section. Although he questioned the action against him, Lee went along, deleting the classified information he held on his computers, and moved to the T (unclassified) clearance zone. He was later subjected to three more polygraph tests before being told by the FBI agents that re-evaluation of the test results showed that Lee had failed all of them.[3]

On March 8, 1999, Lee was fired from his job at Los Alamos National Laboratory on accounts of failure to maintain classified information securely. On the same day Lee's name was leaked to the media, with The New York Times publishing a sensationalist story about his case. However, FBI investigators soon determined that the design data the PRC had obtained could not have come from the Los Alamos Lab, because it related to information that would only have been available to someone like a so-called "downstream" contractor, meaning one involved in the final warhead production process, and this information was only created after the weapon design left the LANL.[3]

Even though this left Wen Ho Lee apparently in the clear, the FBI continued its attempt to find evidence to implicate Lee in committing espionage for the PRC. There were 60 agents and more assigned to Lee's case, working to prove that he was a spy. The FBI conducted a search of Lee's house on April 10, seizing any item related to computers or computing, as well as anything that had notations written in Chinese. The FBI and the Department of Energy then decided to conduct a full forensic examination of Lee's office computer. The examination of Lee's computer determined that he had backed up his work files, which were restricted though not classified, onto tapes, and had also transferred these files from a system used for processing classified data onto another, also secure, system designated for unclassified data.

After the FBI discovered Lee's transfer, they revoked his badge access and clearance, including his ability to access the data from the unclassified but secure network. Lee then requested from a colleague in another part of Los Alamos to be allowed to use his computer, at which time he transferred the data to a third unclassified computer network. The government then retroactively redesignated the data Lee had copied, changing it from its former designation of "PARD" (Protect As Restricted Data), which was just above the "Unclassified" designation and contained 99 percent unclassified data, to a new designation of "Secret" (which was treated on a higher security level than PARD), giving them the crime that the government needed for a formal charge.[3]

The Department of Justice constructed its case around the only real evidence of malfeasance, the downloading of the restricted information. It ultimately employed an unusual strategy of trying to prove that in addition to illegally handling information, Lee was trying to injure the United States by denying it the exclusivity of the nuclear information. Lee was indicted on 53 counts of mishandling information. Janet Reno confirmed with CIA DirectorGeorge Tenet and Louis Freeh that if the presiding judge rules that if the government must reveal in open court what specifically was on the tapes, the prosecution would have to plea out the case or risk jeopardizing state secrets.[citation needed]

Lee spent nine months incarcerated in solitary confinement with limited access to family. His treatment, though consistent with treatment of other prisoners at the Santa Fe facility, became a source of great controversy for the DOJ. In September 2000, Judge James A. Parker ruled that the government was required to disclose the information on the tapes. According to Louis Freeh and Janet Reno, they were left with no option but to plea out Lee in order to find out where the missing tapes were and not risk sensitive government information by bringing it to trial. Lee was freed and at plea admitted to having made copies of the tapes, which according to My Country Versus Me he later destroyed.[8]

Lee pleaded guilty to one felony count of illegal "retention" of "national defense information." In return, the government released him from jail and dropped the other 58 counts against him. Judge James A. Parker apologized to Lee for the unfair manner in which he was held in custody by the executive branch and for being led by the executive branch to order his detention, stating that he was led astray by the executive branch through its Department of Justice, by its FBI, and its United States attorney. He formally denounced the government for abuse of power in its prosecution of its case.[9] Later, President Bill Clinton remarked that he had been "troubled" by the way Lee was treated.[citation needed]

Lee is now retired and lives in Albuquerque, New Mexico with his wife. He also has two grown children. In 2003, he wrote a memoir, My Country Versus Me, in which he describes his love of classical music, literature, poetry, fishing in the mountains of New Mexico, and his dedication to organic gardening.[3] He also charges that his Asian ethnicity was a primary factor behind his prosecution by the government. As evidence of such racial profiling, he cited cases of several scientists of non-Han Chinese ancestry who were responsible for similar security transgressions but were able to continue their careers. Former FBI Director Louis Freeh categorically denied these charges. After Dr. Lee’s sentencing, investigators at LANL were able to fully examine the evidence against Dr. Lee. This was never done by the FBI and access by LANL personnel was not allowed until the FBI investigation was complete.[citation needed]

Lee was awarded a $1.6 million settlement from the U.S. federal government and several news organizations for privacy violations. He has published an applied physics textbook that he started writing while still in prison. He began to write a second physics textbook and would like to teach, but no institutions to which he has applied have responded to his requests.[10]

The 2001 play The Legacy Codes, by American playwright Cherylene Lee, deals with the Wen Ho Lee case.[12]

The 2007 play Yellow Face by Asian-American playwright David Henry Hwang places this incident in the context of a greater number of cases dealing with racial profiling against Asians, particularly the Chinese during the 1980s.

The 2010 short film The Profile by American film maker Ray Arthur Wang is inspired by the Wen Ho Lee case.[13]